Key Takeaways
- IRAs can help you boost your retirement savings — either on their own or alongside a 401(k).
- For 2026, you can contribute up to $7,500 or $8,600 if you’re 50 or older with a “catch‑up” contribution.
- Roth IRAS offer after-tax contributions and potential tax‑free withdrawals later; traditional IRAs offer a potential tax deduction now on contributions and tax deferral until withdrawal.
- A Roth conversion moves money from a traditional IRA to a Roth IRA. You’ll likely owe taxes today in exchange for tax‑free growth/withdrawals later if rules are met.
Planning for retirement can feel daunting. Understanding the different types of retirement accounts and their benefits is a great place to start. Your Edward Jones Financial advisor can help take a closer look at IRAs, including the contribution limits for 2026, how traditional IRAs and Roth IRAs differ and how to convert an existing IRA to a Roth IRA.
What are the IRA contribution limits?
Your IRA contribution limit is the maximum you can contribute across IRA plans. For 2026, the IRA contribution limit for investors under age 50 is $7,500. Investors age 50 and older are allowed to contribute $8,600. IRA contribution limits can change each year. Get to know the current maximum contribution limits for IRAs and take advantage of this retirement savings option.
What’s the difference between a Roth and traditional IRA?
Traditional IRAs allow you to contribute funds on a pre-tax basis. Contributions may be tax-deductible in the year you make them; investments inside the account can grow tax-deferred. You pay taxes when you withdraw from the account, and withdrawals made before age 59 ½ may be taxed and subject to a 10% penalty.
With a Roth IRA, your contributions are after tax. Investments inside the account can grow tax-free, and you don’t pay taxes on withdrawals made after age 59 1/2. Withdrawals of earnings before 59 1/2 may be subject to income tax and a 10% penalty.
If you have a traditional IRA, the IRS requires you to make required minimum distributions (RMDs) when you reach age 73. A Roth IRA has no RMDs.
There are important differences between a Roth and a traditional IRA. You may want to choose one over the other, or go with both. Taxes may affect your decision as well. Your Edward Jones advisor can help.
What’s a Roth IRA conversion?
Converting a traditional IRA to a Roth IRA may provide tax benefits. A Roth IRA conversion occurs when you move funds from a traditional IRA to a Roth IRA. With a Roth conversion, you pay taxes now to convert your funds, but you gain access to tax-free growth potential and distributions in the future.
Do I need an IRA if I have a 401(k)?
401(k)s and IRAs are both valuable retirement savings tools on their own. When used together, they can offer greater savings potential and access to a wider range of features and benefits that may help you progress toward your retirement savings goals. Contributing to both can be a beneficial strategy for many investors.
How can Edward Jones help?
With all the different options to save for retirement, it can be difficult to figure out which ones make the most sense for you. Your Edward Jones financial advisor can help you understand your options and design a retirement savings strategy to fit your needs by comparing retirement account types.
Frequently Asked Questions
What is an IRA and how does it work for retirement savings?
An individual retirement account (IRA) is a personal retirement savings account that offers potential tax advantages. You can contribute money each year, invest those funds for potential growth and use the money to help support your retirement. The tax treatment and withdrawal rules depend on whether you choose a traditional IRA or Roth IRA.
What are the tax benefits of contributing to an IRA?
Traditional IRA contributions may be tax-deductible, which can potentially reduce your taxable income for the year you contribute. Your investments can grow tax-deferred, and withdrawals are generally taxed as income. Roth IRA contributions are made with after-tax dollars, and qualified withdrawals in retirement are tax-free.
What should I know before opening an IRA?
Before opening an IRA, review the current contribution limits and eligibility requirements. Your Edward Jones financial advisor can help you consider how the account’s tax treatment fits into your overall retirement strategy, then choose investments that align with your goals, time horizon and comfort with risk. Setting up automatic contributions can also help you save consistently over time.
How do IRAs fit into my overall retirement savings strategy?
An IRA can complement a 401(k) or other workplace retirement plan by giving you another tax-advantaged way to save for retirement and potentially providing access to different investment options and tax benefits. Contributing to both types of accounts may help increase your overall retirement savings and create greater flexibility as you plan for retirement.